Flying without wires

The sky’s the limit for wireless broadband but some players are tipping major market consolidation.  

Budget airline Jetstar this month launched a Ballina-Byron operation complete with wireless broadband. Jetstar’s plan to have the technology save up to two-thirds of its IT costs at regional airports symbolises a major move towards acceptance of wireless broadband by the mainstream.

Various advances are now clearing the way for a cable-free world of bandwidth-crunching applications and, hopefully, recurrent revenue for resellers.

The category includes the better-than-dialup consumer ISP data speeds of 256Kb/s and 512Kb/s and pricier, more specialised pipes that can pump 10Mb/s.

Market analyst IDC says US wireless carriers generated US$1.6 billion in data service and application revenue from 178.2 million customers in the fourth quarter of 2004. Thirty million US wireless subscribers will be accessing commercial video or TV content and services over their wireless devices by 2009.

Warren Chaisatien, research manager for wireless and mobility at IDC Australia, says the market dynamics until 2009 look promising for wireless broadband here too. "The wireless broadband market has been around in a big way for about 12 months now, popularised by Unwired and Personal Broadband Australia (PBA)," he says. "They’ve done a lot in terms of market awareness and education."

Chaisatien says wireless broadband was being used by 70,000 people in Australia by late 2004 and nearly 390,000 are expected to take it on board by 2009. Rival technologies like cellular 3G may find it hard to keep up -- at least as far as data is concerned. "There’s pretty substantial growth. But in terms of services revenue, it’s still small," he adds. "[Some] 28,000 users generated services revenue of $13.6 million [last year]." That figure may swell to $57 million for the year to December 2005, Chaisatien says.

Voice is the big challenge so Chaisatien tips Telstra and Optus to invest ‘heavily’ in wireless broadband to maintain their edge. When WiMAX is finally ratified -- giving some certainty as to preferred technology -- the market could explode, he says.

The 802.16d-standard products will likely become available in Australia about 12 months from now, and 802.16e offerings should be here by 2007 or 2008, making WiMAX broadband a formidable contender for the hearts and minds of consumers and businesses. "It will be a genuine alternative," he says. "It will compete not only with DSL, but with dial-up."

Voice-over wireless broadband, he adds, is happening, but mainly in the business market. In Australia, consumers have not been keen to pick up on phenomena like Skype, for example.

Wireless broadband providers are at a critical juncture and must get economies of scale to progress further into the mainstream.

"So far, they haven’t had that, because all of them are very small startups, mostly concentrated in Sydney and Melbourne and some elsewhere," Chaisatien says.

Devices and operating systems also could become less exclusive. Proprietary technology might slow things down, he warns, until WiMAX encourages more collaboration between providers. Then the ball may get passed to players like Telstra and Optus, Chaisatien says.

Shara Evans, managing director at telecommunications analyst Telsyte, says 117 wireless infrastructure owners and resellers are operating in Australia. "By every measure, wireless broadband services are on an upswing: the number of providers is growing, the number of users is growing, and revenues are growing," she says.

Evans says it is as a ‘last mile’ connection that wireless internet access is really winning. Wireless local loop services make many times the revenue of hotspot services, diverse providers and a more sustainable business model.

"There are nearly 900 locations in Australia illuminated by Wi-Fi hotspots, but they’re only generating around $1.5 million a year in carrier revenues for the full year 2004 to 2005. Even the most successful providers are only averaging around $150 per hotspot per month," she says.

Evans says fully mobile 802.16e, proprietary mobile wireless and 3G/4G cellular may pretty much snuff hotspots out, partly by pushing prices down. The competitive landscape for wireless broadband is thus changing rapidly, Evans suggests.

David Spence, chief executive at Unwired, has already started partnering to increase coverage and get those elusive economies of scale for the wireless broadband consumer market. He does not rule out future partnerships with the big guys, either. "We do a little bit through Exetel, Veritel and People Telecom [for example], but most of what we do is direct and to retail," he says. "But [we would consider] future deals with AAPT, Telstra, Optus, those guys."

Austar and Unwired have signed a $15 million wholesale agreement this month to trade 2.3GHz spectrum for 3.5GHz spectrum licences, helping the Sydney-based wireless broadband provider -- which is still filling in holes in its Sydney coverage -- get regional and roaming capability. "It was always going to be diffi cult to launch a brand against Telstra in regional Australia, but I think Austar has the brand and product range," Spence says.

Coming software from technology partner Navini heralds an upgrade for Unwired’s network that will help it migrate to WiMAX. "Otherwise, it would have been quite a lot of work for us, going from the current level of technology to the next level," he says.

Unwired signed 25,000 customers by May and expects that take-up to continue. The provider has and will keep investing heavily in marketing and education campaigns, which it believes have been key thus far.

Most customers are on 256Kb/s or 512Kb/s, but when they are on 1Mb/s or more, that’s what they really get, says Spence.

Six to 8 percent bring the product back within the money-back guarantee period because it doesn’t suit their needs, and another 1 percent bring it back after the guarantee expires. That level of customer satisfaction equals or betters that experienced by mobile phone carriers, he says.

Wireless broadband users are going to go on wanting more speed to cope with more data crunching, and also voice. Email boxes are going to have to grow accordingly and machines will talk to each other and delegate tasks, he suggests.

Five years from now, Spence envisages wireless broadband ‘in everyone’s pocket’ via a BlackBerry or PDA-type device. The speed will have accelerated to 1Gb/s to 2Gb/s, but only if you want it.

"Burstable speed is the way to go. Because you don’t want to be always paying for high speed just for email or something. It’s going to get a lot more flexible and I think people will use it for a lot more services," Spence says.

"I think it will split into commercial use, fun use, emergency services and security and, I think, for tracking devices as well. And [the industry] will do a lot more with robotics."

Computergate's Greco: Wireless broadband adds annuity revenue

Mario Greco, managing director at Melbourne reseller Computergate, says his SMB customers are liking wireless broadband and even using VoIP. Wireless broadband adds annuity revenue and a chance for Computergate to offer additional services to new customers. "It’s not a leading product for us, but it does give us other opportunities. It has worked really well for us," he says.

"And who knows where the broadband market is going to go?"

Computergate was initially in the VoIP business, and has bundled VoIP and wireless broadband with some success. "Skilling up with wireless broadband is not difficult -- it’s just another networking product," Greco adds.

The reseller has found that its dealings with numerous other vendors have prepared it for a level of complexity that can cope with supporting wireless broadband for business. Security is the same as with any other broadband offering, he says.

And customers love it, he says. Computergate sells -- and uses -- Access Providers’ wireless broadband offering, which Greco says has high uptime and good services. "They can reach [Access Providers] any time they want."

Big Air's Ashton: It's been a good 12 months

Access Providers is not the cheapest product but it is commercial grade, delivering 8Mb/s or more to businesses. "Access Providers is a really good company to work with. But they can probably do a lot more with their product, to extend them further. It is a good product," Greco adds.

Access Providers also gives specific discounts for volume sales. The hard sell for Computergate, Greco says, is getting customers to understand the contention ratio.

"A lot of people just don’t understand the difference. With wireless broadband, you can have a one-to-one contention ration, which means you’re on one pipe and you don’t share it," Greco says. "With DSL, you can have 18 to 1, 150 to 1, 300 to 1, if you’re all on at 9am."

Jason Ashton, managing director at wireless ISP BigAir, says things are going well for the company, which, like fellow startup Unwired, has had its fair share of detractors. "It’s exceeding expectations. It’s been a good 12 months for us," he says. "People are over the fear, uncertainty and doubt with wireless and really starting to understand the benefits."

Businesses may be the biggest beneficiaries, especially smaller businesses. Wireless broadband can set an SMB free from Telstra and give bigger pipes that help them adopt more efficient IP-based ways of doing things. Crunching more data -- and consolidating functionality via the medium of true broadband -- may be the way to go for many, he suggests.

Reliability and security fears have been largely dispelled as people realise wireless is pretty much the same as any other broadband internet medium. Meanwhile, BigAir has also teamed up with Melbourne-based wireless broadband purveyor Access Providers – a network-sharing move that lets both companies broaden their national reach and achieve those attractive economies of scale.

"We are really competing head-on against traditional broadband services like frame relay, ISDN and ADSL, ATM (Asynchronous Transfer Mode) and fibre," Ashton says.

BigAir hit the headlines in recent months when a group of residents in one wealthy Sydney suburb decided they objected to BigAir’s placing of antennae boxes on the outside of their building and relayed their complaints to a popular current affairs TV show.

However, Ashton says the incident was a minor glitch and an isolated incident. "That was the only place we have had any serious difficulty finding sites," he says.

The problem seemed to be that the residents believed the antennae boxes were like mobile phone towers -- unsightly additions potentially full of dangerous electromagnetic radiation. The residents were wrong -- the boxes are, first of all, hardly visible from outside the building and, second, give off a relatively small amount of radiation, Ashton notes.

BigAir is heading west in Sydney, expanding its network through Parramatta, Blacktown and the north-west business parks. "We think there’s more opportunity in the western suburbs anyway, because there’s so little infrastructure out there. There’s so little ADSL and fibre is very expensive to get connected," Ashton says.

The wireless ISP sees being on the WiMAX road map and Quality of Service (QoS) as critical for business applications. Many BigAir customers are businesses moving to VoIP. There’s no point giving them low or unreliable bandwidth. "Quite a few are using VoIP over their own networks," Ashton says.

He says BigAir bundles in offerings such as pre-configured IP handsets for its business customers where required. The key is to make things convenient for the customers. "They’re into IVR (Interactive Voice Response) and that sort of stuff," Ashton says. "We’ve got so much bandwidth we can support the voice traffi c and the data traffic without any issues."

Bandwidth tends to be website-dependent rather than network-dependent. For the most part, if a customer pays for 10MB/s, that is what he or she will get if all other factors are equal.

High-traffic websites that will slow everybody down are a main cause of bandwidth loss, Ashton suggests. "Or if you have a big office of 10, 20, 100 people with multiple users doing a lot of things. But when we sell a 10Mb/s service, you get it," he says. "That’s where it comes in really handy for business -- you do get the full line speed."

BigAir has started working with resellers and more channel opportunities may be in the pipeline. The Sydney ISP started teaming up with integrators about three months ago and is interested in partnering companies with SMB customers. "We’ll be able to introduce alternative broadband services for them," Ashton says. "[We’re interested in] not national-type businesses but those that have a strong customer base within a local area. So when we build the coverage in that local area, they don’t just bring in another branded DSL product."

Ashton says BigAir is still focused mainly on Sydney and interested in talking to Sydney system integrators and networking integrators. "Not just centrally, but further out," he adds. Brisbane and elsewhere will eventually come under BigAir’s aegis, probably when the ISP feels it has nearly exhausted its Sydney possibilities for coverage expansion, Ashton suggests.

Brennan's Lovegrove: iBurst rounds out services portfolio

Matt Lovegrove, sales and marketing manager at iBurst reseller Brennan IT, says wireless broadband is proving a useful value-add. What’s more, the technology actually works. Lovegrove says 10 years in the industry have made him cynical, but he was actually impressed with iBurst. "A brave new world of always-on, alwaysavailable communication is here...for better or worse," he gushes.

Lovegrove says wireless broadband is one example of a product that can help bring enterprise capability to the SMB. The iBurst wireless broadband product – as marketed by Personal Broadband Australia (PBA) until that company was acquired by telecommunications reseller Commander earlier this year – is mobile wireless broadband. That is, it lets users take it on the road wherever they go within the iBurst network.

"It’s pretty good," Lovegrove says. "But there’s not a lot of money to be made on iBurst services, so it’s not a lead product for us. Rather, it rounds out our services portfolio."

More customers are seeking a ‘mobile solution’ to complement fixed broadband in the office and iBurst is genuinely plug-and-play, he says.

But some customers have not received the throughput they expected and some do not really understand what it offers. "We don’t see iBurst as a mobile internet solution [per se], more as an extension of a customer’s LAN. For example, for fixed services in the office," he says.

Lovegrove says customers have been running VoIP across iBurst. VoIP can run over a softphone using iBurst but there is no QoS yet, he warns. "iBurst isn’t generally voice quality yet," he says. "But my understanding is you wouldn’t be running VoIP over [Unwired] either."

If the wireless broadband vendors can get past their proprietary offerings, wireless broadband may eventually be a real enabler.

Otherwise, there is some danger of a VHS-versus-Beta type scrap in the industry. ‘There’s a clear standard for Wi-Fi and that has some rapid uptake in laptops that are Wi-Fi-enabled. But for WAN, there is not. People don’t want to buy equipment based on that,’ Lovegrove points out.

Lovegrove thinks wireless broadband might follow a path similar to that taken by mobile phone providers in the mid 1990s. In 1995, Australia had five or six mobile phone networks and that proved unsustainable. Consolidation occurred, and the same could happen in wireless broadband, he suggests.

PBA did a good job getting iBurst up and running in Sydney, Melbourne, Brisbane and Canberra, and then Commander stepped in and bought the company. That could be a hint of things to come, Lovegrove says.

Unfortunately, Commander had not responded to CRN’s requests for interview by press-time. Lovegrove says no-one is sure what is going to happen now Commander is running the PBA show. "The message has been that it will be business as usual but Commander is a direct competitor of ours and with most iBurst service providers," he says.

D-Link's Reardon: VAR program shortly

Graeme Reardon, Australasian regional manager at networking vendor Linksys, will not provide figures for its wireless broadband sales, but says 802.11g-compatible items, access points, routers, PCI and USB products are selling well.

Linksys is seeing traction with its ‘Super-G’ range that can cope with up to 108Mb/s under the right circumstances, and with its new SRX Multiple Input, Multiple Output (MIMO) products. MIMO is advertised as ‘intelligent antennae technology’ offering faster wireless speeds over a wider area than standard Wi-Fi gear. "We are starting to work with resellers and will be introducing a VAR program shortly," Reardon says. "And we will be releasing an SMB range over the next few months."

Linksys is also pushing new products it says can assist the integration of voice with wireless. One is a wireless router with built-in VoIP ports, made for broadband provider engin that can be used to adapt analogue telephony to a wireless IP-based setup, he says.

"We’re interested in forming relationships with ISPs who can deliver [appropriate SKUs]," Reardon says.

Ravi Bhatia, chairman of Access Providers, says his wireless ISP has been very quiet until now but is boosting its marketing, going national and developing its channel.

"The full service network has been going for a couple of years. It has proven to be extremely stable and shown high performance in terms of availability, excellent latency, low packet loss and so on," he says.

Access Providers is using the current version of 802.16 and the next version will require a software upgrade. It has a simple network topology, using base stations every 10 or 12 kilometres referring back to a central lock. Melbourne has about 13 Access Providers base stations.

Bhatia has not surveyed Access Providers’ voice capability but says there is no technical reason why one should not go down that path. "Pundits think that [the market] may grow from 200 to 300 percent over the next 12 months. And real growth, pundits think, will come once the WiMAX standard is interoperability-certified, for the simple reason that there will be a steep drop in price," he says.

He reckons the market may have to consolidate a lot. Managing cash flow is going to be critical for some players, and the companies with the right skill sets will go and buy others. Access Providers has made no secret of its own acquisitive tendencies, it might be added. "Right now, there are quite a few very small companies doing things with wireless," Bhatia says.

Access Providers has about a dozen partners and may sign more but be selective, forming relationships with partners developing specifi c wireless broadband applications, for example. "Eventually, the wires are going to run out in many cases. No new copper is being laid and the quality of copper is going to decline," Bhatia points out.

"Over the next five years or so, wireless broadband will really come into its own. And it’s independent of Telstra, so my costs are not controlled by the ACCC and Telstra."